Bombay High Court
Vijay Ramji Pawar And Ors. vs Girna Sahakari Sakhar Karkhana Ltd. And ... on 25 February, 1986
Equivalent citations: 1986(2)BOMCR386
JUDGMENT S.M. Daud, J.
1. This petition under Article 227 of the Constitution is directed against the refusal of Courts constituted under the Maharashtra Co-operative Societies Act, 1960, to prevent the discussion of a no confidence motion tabled against petitioners who are the Directors of respondent No. 1
2. The question that arises for consideration has to be appraised in the following background :---
Respondent No. 1 is a Co-operative Society registered under the afore-mentioned Act and is a 'specified' Society within the meaning of section 73-G of the said Act. On about November 9, 1984, the Board of Directors of respondent No. 1 was elected in conformity with the procedure prescribed by the statute and their number came to 13. In the election held by the Board to elect the Chairman, the successful person was respondent No. 2. The Board of Directors, apart from the petitioners, included respondents Nos. 2 to 6. Soon after the election of respondent No. 2 as the Chairman, a tussle began between two factions of the Board. The Board by a majority passed a resolution expressing its lack of confidence in respondent No. 2. On receipt of the requisition to discuss the proposed 'no confidence' against him, respondent No. 2 convened a special general meeting of the Society to discuss the vote of no confidence labelled as against the entire Board. Coming to know of this, the petitioners raised a dispute under section 91 of the Act before the Co-operative Court. In the petition moved by them they claimed a declaration that Bye-law 34(C) upon which reliance had been placed by respondent No. 2 to vote upon a motion of no confidence as against the whole Board was null and void. This was because the said bye-law was in conflict with section 73-G of the Act and was not saved upper section 144-E thereof. An injunction was also sought to restrain the passing of a resolution which would have the effect of curtailing the term of office of the Board fixed under section 73-G. As interim measure, the Co-operative Court was moved to grant all interim injunction. The Co-operative Court rejected the application. Its finding was, that prima facie Bye-law 34(C) appeared to be intra vires the provisions of the Act. Next, the petitioners had neither made out a prima facie case nor did the balance of convenience lie in their favour. Against this order, the petitioners moved the Co-operative Appellate Court. The move did not succeed and the view taken by the first Court was affirmed. The petitioners then moved this Court and Mr. Justice R.A. Jahagirdar after admitting the petition, granted ad interim relief in terms of prayer Clause (c) which reads thus:---
"That pending the hearing and final disposal of the present petition, and injunction be issued restraining the respondents Nos. 1 to 6 and the officers of the respondent No. 1 from acting upon and/or giving effect to Bye-law No. 34(C) of the respondent No. 1, and further restraining them from holding any general meeting either on 9th October, 1985 or an any other date for passing a vote of no-confidence against the Board of Director of the respondent No. 1."
Subject to the usual variations, the final relief sought will also be to the same effect.
3. The main opposition comes from respondent No. 2. He is the ex-chairman of the Board of Directors and according to him Bye-law 34(C) is valid. It is not inconsistent with 73-G and 144-E of the Act. At any rate, the general body has a right to discuss the doings or otherwise of the members elected to the Board by it. If the said body is restrained from holding a meeting to discuss a motion expressing lack of confidence in the Board, that would effect a constitutional right of the members to express themselves upon the working of the Board which is responsible to it and whose election is based upon the exercise of the franchise by them. Petitioners and other-members of the Board had offered themselves for election with knowledge of Bye-law 34(C) governing the poll. They are, therefore, stopped from questioning the validity of the said bye-law. The bye-law was a condition upon which the poll was held. Neither the petitioners nor any other members elected to the Board of Directors can now seek to retract from the right given to the general body by the bye-law to vote them out of office. Some six person-hereinafter to be referred to as the "applicant" have been allowed to intervene in this petition vide the order passed in Civil Application No. 305 of 1986 on 24-1-1986. They are supporting the stand taken by respondent No. 2. Respondent No. 1 which is represented by Mr. Raja Bhonsale-submits to any order the Court may pass and has expressed its readiness to abide thereby.
4. Having regard to the submissions made before me, the points for determination are :---
1. Whether the petition is not tenable inasmuch as it is aimed against an order passed in exercise of discretion or because it is aimed against an interlocutory order ?
2. Whether Bye-law 34(C) is in conflict with section 73-G and is not saved by section 144-E of the M.C.S. Act, 1960 ?
3. Whether the proposal to discuss the vote of no confidence has to be wholly prohibited ?
4. What order ?
My findings, for reasons given below, are :---
1. No; the petition is maintainable .
2. Yes.
3. No; not so.
4. See order.
REASONS
5. The preliminary objection taken to the petition is two-fold. First, it is submitted that the order impugned is an interlocutory order, and as such, one with which the Court should not interfere. Next, it is submitted that the order has been passed upon an application calling the courts below to exercise a discretionary power. For reasons which cannot be said to be arbitrary or capricious, those courts have come to a conclusion that the grounds for the passing of an interlocutory injunction have not been made out. Even if it be possible differ with the view taken by these Courts, the High Court acting under Article 227 should not interfere for it is well settled that the supervisory jurisdiction has to be exercised with the utmost care. The principles governing the grant of interim injunctions are too well known to need a repetition by me. In American Cyanamid Co. v. Ethicon Ltd., 1975 All.E.R. 504 the House of Lords reiterated the well settled principles governing the grant of interim injections. At one stage Lord Diplock had this to say :
"Prima facie case' may in some context be an elusive concept .....The use of such expressions as 'a probability', 'a prima facie case', or 'a strong prima facie case' in the context of the exercise of a discretionary power to grant an interlocutory infunction leads to confusion as to the object sought to be achieved by this form of temporary relief. The Court no doubt must be satisfied that the claim is not frivolous or vexatious : In order words, that there is a serious question to be tried."
Now, the mere fact that the courts below have appraised the issues relating to 'prima facie case' and 'balance of convenience' and also that they have come to the same view, does not preclude a re-appraisal by this Court. Petitioners contend that they are sought to be voted out of office upon the basis of a bye-law which is in conflict with the statute. To be voted out of office in exercise of a power conferred by a bye-law which is void, is to suffer an injury. Where the injury is an actionable injury, the courts are under an obligation to come to the aid of the affected party. The contention that I should not interfere at an interlocutory stage is equally unfounded. There is nothing left to be decided by the statutory courts. The factual position is not in dispute. It is submitted that a Board of Directors was elected and that a vote of no confidence is sought to be tabled against it. The motion of no confidence is being tabled in pursuance of a bye-law of respondent No. 1. The validity of that bye-law is in issue. If prima facie, the challenge posed in the petition is well-founded, a writ Court cannot be stopped from considering the question, merely because (technically) the matter is at an interlocutory stage. In fact after a decision at the interim stage is given the parties will not have any serious interest left in prosecuting the dispute raised before the Court of first instance. Incidentally, if at the threshold itself a serious question arises, the writ Court cannot refuse to entertain it on the plea that the parties have an opportunity to debate the issue at length before the statutory courts. The consequence of inaction, if calamitous, has to be prevented by the intervention of the High Court acting under its extra-ordinary powers. Mr. Hattangadi for the intervenors argued that petition was not bona fide as it sought to stifle discussion into allegations of corruption against the Board. This, according to learned Counsel, showed that petitioners were not acting bona fide, and, therefore, were not entitled to any indulgence. For a proper consideration of this submission, it would be necessary to go into the factual and other aspects of the matter. This will have to be done in any case at a later stage. Presently all that need be said is that abstract concepts of justice and equity cannot be considered in a vacum or upon pre-conceived notion.
6. This brings me to the basic issue in the case. The submission is that a general body cannot pass a vote of no confidence or remove a Board of Directors elected for a particular period in contravention of section 73-G. If a bye-law regulating the affairs of the society permits the passing of a resolution which has the effect of curtailing the term of the Board, the said bye-law is in conflict with the statute, and will therefore, have to give way. Action contemplated under a void bye-law has to be prevented and this can be done only by an injunction. At one stage Dr. Naik said that he wanted to challenge the vires of Bye-law 34(C) on the ground of its being unreasonable and/or impracticable. To this, the reply was that no such plea had been taken in the dispute raised before the statutory courts. Dr. Naik frankly conceded that except for describing the bye-law as Improperly, his clients had not taken the specific contention as is now sought to be advanced. A point not taken in the Court below cannot normally be allowed to be raised in the hearing before this Court.
7. To the extent section 73-G(2) is relevant it reads thus :
"When the election of all the members of the committee of any such society is held at the same time, the members elected on the committee at such general election shall hold office for a period of five years from the date on which the first meeting is held and shall continue in office until immediately before the first meeting of the members of the new committee."
Dr. Naik in support of the submission that the Board has a right to be in office for a period of five years and until immediately before the first meeting of the members of the new committee, relies upon two well known decision viz. S.L. Kapoor v. Jagmohan, and the Full Bench decision of this Court reported in Vidarbha Nagarpalika Parishad v. State of Maharastra, 1985 Mh.L.J. 887 To be brief, the ratio in both the cases is that the holders of an office created by a statute have a right to serve the full term prescribed thereunder. In fact, the Full Bench has gone to the extent of removing a possible mis-conception about the powers of the statutory body after the expiry of its prescribed time-schedule. In reply, respondent No. 2 and the applicants submit that the five years term contemplated by sub-section (2) of section 73-G fixes only an outer limit. In any case, Bye-law 34(C) only gives effect to the primacy of the general body which is also accepted vide section 72 of the Act. Section 144-E speaks of a dis-qualification, "by or under any provisions of the Act". Bye-laws have statutory force because they are drawn up and enforced under the powers conferred upon a society by the statue. Once they are accepted as required by the statute they become a provision supplementing the Act. Therefore, unless there be a prohibition in the Act disabling the general body from doing anything, a prohibition cannot be read into the powers of the general body. It is not possible to accept the contention that section 144-E(1)(c) takes within its scope a bye-law framed or adopted by a society. Where the framers of the statute wanted to indicate that bye-law would also govern a situation, they have made that expressly clear in the statute itself. An instance of this is sub-section (3) of section 73-G which makes it clear that the committee of management shall be elected by a general body irrespective of what the bye-laws of the Society prescribe. That the bye-laws have to give way, if there be conflict between them and the statute, is not disputed. Section 9 of the Act specifically provides that the Registrar has to accord approval to such bye-laws as are not "contrary to the Act or to the Rules". Sub-section (2) of section 73-G indicates that the members elected on the committee (here, the Board) at the general election to elect the committee are to hold office for a period of five years. Next, it lays down that the five years are to be computed from the date on which the first meeting is held. Lastly, the term of office is extended right upon immediately proceeding the first meeting of the members of the new committee. The conflict between this provision and Bye-law 34(C) is clear. The English rendition of this bye-law appears at Page 8-A of the petition also is not disputed. It reads thus :---
"Resolution proposing vote of no confidence against Board of Directors can be brought either at an ordinary general meeting or special general meeting convened specifically with such item on the Agenda. Such resolution can be passed by members entitled to vote by a simple majority from amongst the entire members. After such a resolution is passed a new Board of Directors can be elected."
In Hindurao's Balwant Patil v. Krishnarao Parshuram Patil case, a somewhat similar question arose for determination. Strangely enough both the parties rely upon that decision in support of their opposite submission. True, speaking it cannot be referred to as a direct authority by either proponent. In that case, the question passed for resolution was---
"Whether in the absence of any provision in the Act, Rules or the bye-laws of the Society, managing committee can pass a resolution of no confidence against the Chairman and Vice-Chairman before expiry of their term ?"
The petitioners through their Counsel submitted that under section 73-G of the Act, the members of the managing committee had a right to hold office for a period of five years from the date on which the first meeting was held. Though the model bye-laws, relied upon contained a provision for the passing of a vote of no confidence against the Chairman and Vice-Chairman, the said bye-law had not been approved by the Registrar of Co-operative Societies vis-a-vis the Society figuring in that case. Therefore, it was only the Act and the Rules which applied. The absence of the provision in the bye-law to warrant the tabling and passing of a no confidence resolution was an omission which barred a discussion and vote in regard to all the committee members. In the absence of a bye-law enabling a resolution of no confidence, the managing committee could not vote out of office, office-bearers like the Chairman or Vice-Chairman. A number of answer were attempted to the contention summarised above. Firstly, it was contended that section 73-G(2) merely laid down the outer limit to what was known as the term of office. This was meant to convey that the elected members could not continue in office beyond the period of five years. The right of the general body to take punitive action against the Board of Directors pursuant to the later losing confidence reposed in the Board, could not be featured. The moment the elected Board lost the confidence of the general body, there was no alternative before it, but to vacate office. The members of the Board constituted an electorate vis-a-vis the Chairman and Vice-Chairman and had an implied right to pass a resolution ousting them. The Division Bench considered all the points in great detail. Dealing with the point about the general body having an implied right to vote against the office bearers, the Judges said---
"As already observed, the right to contest the election and the right to move for setting aside an election or right to recall the person already elected, are not common law rights. These rights must be conferred by the statute and therefore, can be enforced only in accordance with and subject to the conditions laid down therein by the statute concerned.....The statute has created a right and has also imposed restrictions. The Act, rules and the bye-laws do not confer any right upon the members of the Board of Directors to remove the Chairman and the Vice-Chairman by passing a mere vote of no confidence. Therefore, it will not be proper to confer such a wider power upon the Board of Directors by taking recourse to the doctrine of implied or inherent power. "
The contention, that the Division Bench has upheld a bye-law similar to Bye-law 34(C) which figure in the instant case, in based, upon mere observation without indicating the approval of the Bench. For instance, at one place the judgment reads thus :
"By the Bye-law 34(C) power is conferred upon the general body to pass a vote of no confidence against the Board of directors. There are other provisions in the Act, Rules and the bye-laws dealing with disqualifications and the removal of the members, which are sufficient to protect the society."
As said earlier, this is a mere passing reference to the existence of Bye-law 34(C) which enables the general body to pass a vote of no confidence against the Board of Directors. In no sense can the passage be relied upon as to upheld the validity of the said bye-law, and specially, in the light of section 73-G(2) of the Act. In fact the conflict between the bye-laws and the statute was differently placed viz., that these seeking to us the Chairman and Vice-Chairman were relying upon an implied power which was contrary to the statute and which was not supported by any bye-law. In the instant case, the point in issue is, whether an approved bye-law is in conflict with the statute, and if so, whether this can be taken recourse to, to justify the control vested in the general body by section 72 of the Act ? Section 72, though conferring the final authority of every society in the general body of members, makes it clear that this is subject to the provisions of the Act and the Rules. It is not, therefore, correct to say that the general body has unfettered and unhampered powers to do any thing irrespective of provisions to the contrary in the statute. The general body's power is conditioned and restricted even when exercising broad powers vested in it, vide section 72. Dealing specifically with the power to remove office-bearers, the Division Bench observed :---
"In this context, it cannot be forgotten that the Chairman or the Vice-Chairman, though elected by the members of the Board, become office bearers of the society as a whole after their election. They have a right to continue in office for five years which is co-extensive with the term of the committee or the Board of Directors. The enactment itself provides for the removal of the members under certain circumstances only. When law has made specific provision in this behalf, it will not be open to adopt some other procedure to achieve the same object. By importing the doctrine of implied and inherent power or right to recall, the members of the Board cannot be permitted to do indirectly what they are not permitted to do directly under any of the provisions of the Act, rules or the bye-laws. Power to recall is not inherent in the electorate. Therefore, in the absence of such a power it was not open to the members of the Board of Directors to remove the Chairman or the Vice Chairman by passing a mere resolution of vote of no confidence. In the result, therefore, the resolution of no confidence passed against the petitioners is set aside, it being ultra vires of the powers of the members of the Board. As a necessary consequence of this, the Chairman and the Vice-Chairman are entitled to continue in office for the unexpired period of their tenure, obviously subject to the other provisions of the Act, rules and the bye-laws."
The inference flowing from this passage, vis-a-vis the facts and the law applicable to this case, is clear. In Hindurao's case a power not flowing from a bye-law but contrary to the statute was pleaded to justify the attempted removal of office-bearers. The Court there ruled that the statute could not be contravened in the name of implied powers flowing from the control vested in the general body vide section 72 of the Act, in this case, respondent No. 2 and the interveners rely upon Bye-law 34(C). To the extent the bye-law cuts down the venture of the Board of Directors, it is clearly in conflict with the statute and will have to give way before it. Sub-section (2) of section 73-G specifies "that the members of the Committee shall hold office for a period of five years and until immediately before the first meeting of the members of the new committee". Bye-law 34(C), makes the statutory provision afore-mentioned. But neither section 73-G nor any other provision in the statute permits the intrusion of continued confidence as a condition for the retention of office by the members elected to the Board. Therefore, contrary to the statute, the bye-law seeks to enter the arena. The argument that this section only fixes the outer limit etc. etc. was considered and negatived in Hindurao's case. I am aware of the dangers of intending the ratio of a decision by analogy. However, a process of reasoning in the construction of statutory provisions, once adopted by a Division Bench, should to the extent permissible, be followed by all Courts-at least until such time as it is not reversed by a higher courts. Mr. Hattangadi for the intervenors submits that the view that has commenced itself to the statutory courts-albeit in relation to the interpretation of a statutory provision-should not be overlooked when this Courts is exercising its extra-ordinary jurisdiction. It is not possible to agree with this submission where the courts below have taken a palpably incorrect view of the matter. The conflict between bye-law 34(C) and section 73-G(2) is clear. Equally clear is the duty of Court acting under Article 227 to upheld the primacy of the law.
8. This brings me to the other grounds urged by respondent No. 2 and the interveners to refuse relief to the petitioners. Firstly, it is submitted that the claim for an interim injunction is premature. Respondent No. 2 has given a notice of a meeting to discuss the vote of no confidence. For ought we know the general body may reject the motion of no confidence. It may re-affirm its confidence in the Board and it may go further, and on a preliminary motion, refuse to permit even a discussion on the no confidence. In shutting out the very consideration of the motion of no confidence, petitioners are actuated by mala fides. They cannot be allowed to stifle free speech and it is a fundamental right of the ordinary members to deliberate and rule upon a motion expressing lack of confidence in the Board. Basically this argument boils down to the plea of prematurity in the filing of the petition. In seeking to discuss the motion of in confidence, opponents of the petitioners rely upon Bye-law No. 34(C). Under this bye-law, the matter does not end by the mere passing of the resolution. Once a resolution of no confidence is carried by a simple majority, the Board goes out of office and a new Board goes out of office and a new Board can be elected. It is difficult to know how the bridge between the two area is to be spanned. Be that as it may, if recourse is being had to Bye-law No. 34(C), it cannot be said that the petition moved is premature. This is the stage at which the vires of the Bye-law has to be decided. If action proposed to be taken be ultra vires, it has to be checked at the very inception. Next, it was contended that until the statutory courts look into the matter closely and accede to the claim of a declaration made by the petitioners, it will not be in order to issue an injunction. The fact that a declaration is claimed and the relief of declaration is prospective in application, does not mean that an injunction should be refused where the Court cannot but accede to the request for a declaration-albeit the final declaration-albeit the final decision there on, has to be relegated to a later stage of the proceeding.
9. An important plea raised by the opposition is based upon the principle of approbate and reprobate. The submission is that petitioners and other members offered themselves for being elected to the Board knowing fully well of the existence of Bye-law 34(C). At the stage they offered themselves they impliedly held out to the electorate a liability to be recalled, if they lost the confidence of the voters. Having been elected under the liability of being subject to recall vide a bye-law it is not open to these elected to now repudiate the provision enabling exercise of the right of recall. A similar argument has been considered and negatived in The Bar Council of Delhi v. Surjeet Singh, reported at . There the petitioner had offered himself as a candidate and had subsequently challenged the validity of the rules whereupon the electoral roll was prepared. It was contended that having participated in the election, he was stopped from challenging the same. This challenge was negatived and it was held that the petitioner could not be estopped from challenging the rules governing the election. To counter this plugging respondent No. 2 contended that the present petition was barred by the doctrine of promissory estoppel. Members constituting the Board had offered themselves for election and even canvassed for the votes of the general body. The general body was aware of Bye-law 34(C), and assumed, and, rightly so, that every person offering himself as a candidate for the Board was subject to the right of recall guaranteed under Bye-law 34(C). The voting was held on this basis and it was on the express right of recall, that the general body elected the petitioners. In other words, petitioners had given a promise to be recalled if they lost the confidence of the general body. They are, therefore, estopped from assailing the vires of Bye-law 34(C) on the basis of doctrine of promissory estoppel. A very simple answer to this proposition is that the doctrine cannot buttress a provision which is contrary to the law. Incidentally, it has to be pointed out that the voters also must have or should have known that the election had to be in accordance with the statute and that every bye-law in conflict therewith had to give way.
10. Mr. Hattangadi submitted that even if Bye-law 34(C) was contrary to section 73-G(2) of the Act, the injunction claimed by the petitioner could not be issued. This was because the general body was supreme and could not be forbidden from discussing the conduct of the Board. If the general body is interested in a mere discussion, there is nothing in the Act to stop them from doing so. But if the object of the discussion is to attain something meaningful, as seems to be the purpose of respondent No. 2 and the applicants, it cannot be said that they are indulging in a permissible exercise of the right of free speech.
11. I now take up for consideration certain objections based upon general principles governing the grant or refusal of interim relief. The first submission is that even if a discussion results in the passing of a vote of no confidence, no irreparable loss would ensue to the petitioners. They are the holders of an elective office and have no vested right in sticking to office for entire duration of five years. At any rate, if the no confidence motion is not self executory, the general body cannot be prevented from considering the resolution and voting thereupon de hors Bye-law 34(C). On behalf of petitioners, it is made clear that they seek no more than an injunction to pass a resolution which will have the effect of interrupting the term of their office fixed by the statute. Once this is guaranteed, the requisitionists for the meeting to discuss the no confidence resolution, can do what they want. I see no reason to turn down the submission advanced by respondent No. 2 and the applicants. As long as they are not seeking to make the resolution, if passed, executable as provided under Bye-law 34(C), the Board, including the petitioners, cannot seek to prevent the conclave, the deliberation and the passing of resolution . This resolution may not be enough to interrupt the tenure of the petitioners vis-a-vis section 73(2), but it can certainly be used by the requisitionists for a public debate on the alleged mis-deeds of the Board and to invite punitive action by the authorities constituted under the Act. I say this on the assumption that their are mis-deeds are such as to warrant and permit legally the removal of either the Board or members thereof.
12. The position that emerges from the forgoing is :---
Respondent No. 2 and the applicants though entitled to discuss and rule upon the vote of no confidence moved against the Board including the petitioners, are not entitled to claim that the resultant vote of no confidence-assuming, one is passed-shall be executable as provided by Bye-law 34(C), insofar as it seeks to curtail the term of the petitioners as members of the Board, is void. However, as said earlier, this does not prevent respondent No. 2 and such members of the general body as are with him, to discuss the tabled resolution and to take such action not including the enforcement of the resolution vis-a-vis Bye-law 34(C) as they may be advised to take. A request is made that if the rule is to be made absolute in the above terms, it should be done only on condition that petitioners who have now taken over management of the society, notify another date for the holding of the meeting to discuss the resolution. I do not want to enter into this realm. If the petitioners are under an obligation under the Act, rules or bye-laws to convene a meeting if so requisitioned, they will do so. If they fail or refuse to do so, the aggrieved persons have a right to approach the statutory authorities. Therefore, on this matter, I will not issue any direction. Having regard to the forgoing, I pass the following order.
ORDER Respondent No. 2, the applicants and such other members of the general body as are so inclined, may discuss and vote upon the motion of no confidence tabled against the Board of Directors which includes the petitioners. If they express lack of confidence in the Board by a simple majority, the said resolution shall not be capable of execution vide Bye-law, No. 34(C) This is because the said bye-law to the extent it seeks to curtail the term of the Board fixed under section 73-G(2) of the Act, is void. However, the resolution, expressing lack of confidence if passed, may be utilised by respondent No. 2, the applicants and such other members of the general body as so desire, for any other remedy that may be open to them under the Act or the rules. Costs here as incurred. Rule made absolute in the above term.